§ 3.27 p.m.
§ LORD PETHICK-LAWRENCE rose to call attention to the economic situation; and to move for Papers. The noble Lord said: My Lords, in opening this debate in your Lordships' House I am sensible of a deep feeling of responsibility. There are two subjects of supreme importance to the men and women of our country. One of them is the peace of the world. If we lose that, and if war breaks out, the whole future of our civilisation will be at stake. The other is the internal economy of our island home in which we move and live and have our being. It is to that second question that we are turning our attention this afternoon. I am aware, of course, that it is the special province of the Members of the House of Commons to deal with the subjects on the Budget that are matters of debate, but it is not only the right but the duty of Members of your Lordships' House to give their counsel to Her Majesty on the prosperity of the Realm, and in pursuance of that duty it behoves us to examine and satisfy ourselves as to the stability and the progressive character of our economy. Stability requires that we should pay our way both at home and abroad. Progress means that the standard of life of the whole of our people shall be advancing. But even if we are satisfied that both these conditions are fulfilled we ought not to be content if in any respects there are measures that could be taken which would improve and carry to an optimum 18 our economic life. I am bound to confess that a study of the various White Papers that have been issued to us in recent days and a perusal of the reports of the speeches—excellent speeches as I think many of them were—in another place during the past few weeks, leave me uneasy on all these points.
§ Let me begin with stability. It is perfectly true that our gold and dollar reserves have been climbing up slowly during the last few months, but if we deduct the subventions that we have received from across the Atlantic, then the accretions to our reserves have been pitifully small in terms of the large figures of modern finance. And even with American aid our reserve to-day falls far short of the peak of the Spring of 1951 and is, in fact, considerably less than one-third of the sterling short-term indebtedness. When we turn to the balance of payments, it is true that there appears to be almost a substantial figure on the right side of the account—I think it is £225 million—during the last year. But over £100 million of that is American aid, which I do not think can really be put in as a balance in our favour for general purposes. It may at any time be withdrawn and we are left with a sum, large as it may seem from certain points of view, which is really exceedingly small if it is all that stands between us and disequilibrium. In fact, any mischance may easily plunge us heavily downward into the red.
§ Let me take two illustrations. We were exceedingly fortunate during last year because, on top of the great improvement, from our point of view, in the terms of trade in 1952, amounting to several hundreds of millions, we had a further improvement last year which, according to the Economic Survey, amounted to no less than £200 million to £250 million. It is clear that if this trend in our favour in the terms of trade were to be reversed, even to only a slight extent, it would play havoc with our balance. Further, it is only a little while ago that we saw a large cloud arising over the Western horizon. There was the prospect of a recession in the United States, which many people felt might grow to grave dimensions. I do not think we are quite out of the wood yet, but it does seem as if that threatened recession is checked and may not grow to anything very much larger. 19 It also seems that such a recession as did take place has not had, so far at any rate, any serious ill-effect upon our economy in this country. Still, one never knows, and we cannot say that we are safe. I hope the noble Earl, Lord Selkirk, who is going to reply at the end of this debate will have some reassuring figures with regard to the situation of this American recession of the last few weeks. If so, I am sure the whole House will be glad if he will announce them.
§ I should like to make it plain that in saying all this I am not attacking Her Majesty's Government in the slightest degree. In fact, I am not at all sure that the Chancellor of the Exchequer, if he were here to-day in person, would not have said a hearty "Hear, hear," to a great deal of what I have already put before your Lordships. Moreover, for this occasion at any rate, I am not raising the debatable question—the Party issue, if you like—of how far the more favourable condition of to-day is due to good fortune exclusively, or whether in some measure, and, if so, to what extent, it is due to the policy pursued by the present Government. But I do say (and this is practically my only Party point) that it rather knocks the bottom out of the fallacious charges made by certain supporters of the Government—I except the Chancellor of the Exchequer, who has always been perfectly fair in the matter—that the tidal wave that struck the ship of State in the middle of 1951 rose from the misdeeds of the Labour Government and its Chancellor of the Exchequer, Mr. Gaitskell, when its real cause was the outbreak of the Korean war, which sent prices rocketing and compelled us in the teeth of the heavy competition of stockpile buying by the United States to make a certain stockpile for ourselves. Apart from this slight digression into Party politics, my desire is to state the simple, straightforward facts so that all Parties equally may not live in a fool's paradise. Our stability does exist but it is by no means firmly established, and needs unsleeping vigilance to preserve it.
§ I turn now for a brief moment to the questions of E.P.U. and G.A.T.T.—that is to say, as your Lordships know full well, the European Payments Union and the General Agreement on Tariffs and Trade. In my opinion, and in the view 20 of those for whom I speak, these bodies perform valuable services in the promotion of international trade, the former by enabling credits and debits between certain European countries to be carried forward from year to year, and the latter by lowering tariff barriers by mutual agreement. We certainly hold that these bodies, as such, are of great value, especially to this country which, more than any other country, is dependent for its existence and prosperity on world trade. But there are a certain number of people who are constantly pressing the Government to get out of E.P.U. and out of G.A.T.T. I want to say clearly that we on these Benches support the Government not only in remaining in these bodies but in doing everything that is possible to promote their successful working.
§ When all is said and done, the essential thing we have to think about is production, for without abundant production at a reasonable cost neither E.P.U., G.A.T.T. nor any conceivable financial or trading device can enable us to market enough goods overseas and satisfy the requirements of our own population at home. Nineteen fifty-two was a bad year and production actually fell; 1953 was much better, but even now we have only just made up the loss and just passed the earlier peak. We must do far better than that in future if we are to attain to progressive prosperity. How is it to be done? There are only three ways: more efficient team work by all partners in industry; more and better capital equipment, and more workers to share the burden. The first can be obtained only by better education, both technical and moral. Money wisely spent on education is productive money. Money spent on education for citizenship yields material as well as moral returns. Improved capital equipment can be secured only by forgoing immediate consumption in favour of increasing the means of better production in future. We did not do so very well in this matter in 1953. When the returns are carefully analysed it will be found that private enterprise, at any rate, extended its equipment very little, and spent little money on new and improved machinery. If we were to go on like that from year to year it would present a bleak prospect, considering the increasing claims that are made on our productive resources.
21§ The Chancellor of the Exchequer has decided—and I am not going to argue to-day whether he is right or wrong—not to have a considerable above-the-line surplus in his Budget. That being so, it falls to the private citizens of this country to provide the means out of which new capital investment can be secured either individually or in corporations composed of private individuals. Of course, anything in the nature of a rise in prices will discourage them from that. If prices are going up, people do much better to spend while prices are low. Therefore, it is essential, if we are to find the means of capital investment in that way, that we should shun inflation like the devil.
§ Granted the decision of the Chancellor of the Exchequer not to provide any money for capital development out of the Budget, his new scheme of his investment allowance has, I believe, a great deal to commend it. That applies quite outside Party limits, and will, I think, be the general view of us all. But the details of this new scheme certainly require a good deal more investigation and explanation. I notice that it was described in the other place by more than one speaker, including, if I am not mistaken, one of the Treasury Ministers, as a 120 per cent. allowance on investment. I do not know whether that is correct, but it is certainly a new method of finance to allow a person, over the period of life of the new machinery, not merely to write it all off but to write off 120 per cent. of it. I am not saying that it is necessarily wrong, but certainly it wants some thinking about and some justifying, and I have no doubt that the noble Earl who is to reply will be able to explain whether it is correct that this is a 120 per cent. allowance, and will give us reasons why we should support it. I think probably he would serve us best if he were to take some concrete figure—I do not care what it is, £10,000 or £100,000—and assume that a manufacturer is going to purchase that amount of new machinery, or fixed capital of some kind, and say how that will be allowed for in reduction of income tax over the whole life of the machinery. I hope that the noble Earl will be able to oblige with something of that kind.
§ Then there is some question as to the nature of the capital investment which will attract and qualify for this allowance. Perhaps the noble Earl can give 22 us a little information on that point, too. I noticed recently in a Sunday paper a rather amusing suggestion that women should claim for this investment allowance for capital investment in their kitchen machinery. Possibly that was intended somewhat as a jest, but there are many true words spoken in jest. I believe that the Chancellor of the Exchequer would be better advised, in the interests of good economy, to think about this proposal—it would certainly be more advantageous than putting a purchase tax on, say, a refrigerator. However, that will be for the Chancellor of the Exchequer to think over in his quieter moments. While the noble Earl is dealing with Clause 15 of the Finance Bill—that is, the investment allowance—he might possibly be able to answer a simple question from me in relation to another clause in the Finance Bill which deals with valuation for purchase tax. Perhaps he can tell me whether I am right in thinking that the sole intention of this clause is to deal with the case of a retailer who, because he is a chain-store, or something of that kind, buys direct from the manufacturer, instead of going through the medium of the wholesaler. If that is the object of the clause, as I believe it to be, then I think there is something to be said for it. Everything that reduces purchase tax and makes goods cheaper is better for the economy of the country all round. If it is a special favour to the big men, as against the little men, then I feel that we should have to think twice about it.
§ There remains the question of finding additional workers. No doubt I shall be told that, while that may be feasible in ordinary times, when there is a certain amount of unemployment, it is not possible to-day, because we have no slack to take up in these modern days of full employment—which I think some noble Lords used to call, when the Labour Government were in office, over-full employment. But is this really the case? I contend that there are at least two classes of workers who are not fully employed at the present time, who would like to be fully employed but who are prevented from getting employment by obsolete ideas and prejudices, or by lack of proper organisation which could and should employ their labour. In that connection, I should like to say that full employment, as we have it at the present 23 time, disposes of certain of the objections which existed in days of unemployment to the working of that additional class of labour, because the additional class of labour is not going to take the bread out of the workers' mouths. Anybody who wants to can get a job to-day, and any additional labour will increase production and will not throw people out of work.
§ The first of the two classes to which I want to refer consists of married women who are unable or are unwilling to work full-time. Your Lordships may have read some of the interesting correspondence which is proceeding in The Times on this question with regard to a particular class of married women workers. There is one difference between men and women which is often not sufficiently recognised. It is that, whereas men excel over women in specialisation on a single craft—maybe in the mining or mechanical field—women excel over men in their versatility. Though that is not a universal truth, it is a general truth, and it is in accord with the difference between the rhythm of women and the rhythm of men. However that may be, it is undoubtedly a fact to-day that there are large numbers of women—generally married women—who are either unable or unwilling to give full-time work, but who are anxious to be employed for part of their time, and who would give good service in such a direction, provided that an opportunity was made available for them. Let me give just one concrete illustration—other noble Lords will no doubt think of many quite different ones. Take the teaching profession. We are told that there is a great shortage of women teachers at the present time, and yet there are large numbers of women who are quite competent to qualify and quite willing to teach, but who are not able to teach for the whole day. It may involve some difficulty of organisation, but it should be perfectly possible to have some women teaching only in the morning and other women teaching only in the afternoon. I am not an expert on educational matters, and there may be some snag in that, but I do not think there is.
§ The other class of available workers is the elderly people, of both sexes, who have been arbitrarily thrown out of employment because they have passed some fixed age for retirement. Some men 24 and women of that age are perfectly capable of working full-time; others would prefer half-time or possible three-quarter time. It is not only that their services would be of value to the community. We have gone a good deal past the idea that the greatest happiness in life is to cease from all productive creative work and sit on a chair with folded hands, smoking a pipe. There are large numbers of people to whom creative work is an essential if they are going to enjoy the remainder of their life. We have only to point to the other place, where the prime mover and figure is a man who has passed by many years the period allotted for human beings to work and passed the date when he should normally have retired. It may be said: "That is all very well, but you cannot fit these people in. They would create an industrial organisational problem; they would raise a lot of awkward human questions and would upset a large number of people." That is always said of every proposal which is likely to alter somewhat the conditions in which we live at the present time.
§ I am old enough to remember the day—and I dare say a good many of the older members of your Lordships' House will remember it, too—when a large number of young children worked half-time while the other half was given to schooling. The claim was then made that, if that were abolished, and if there were no half-time for children, the whole basis of industry in certain industries would be upset. Of course, that was nonsense. We have practically no half-time child labour to-day, yet industry manages very well without them. Somewhat the same thing is true to-day in the opposite direction. I do not believe for a moment that it is impossible to work in half-timers and three-quarter timers. The old and the women have a good deal to give to the nation, and it is a mistake on our part to shut them out, by prejudice or a refusal to change.
§ Therefore, I say that those two classes of workers can and should be enmeshed in the productive machine. If that were done in the case of the old, it would go a long way to removing the oft-quoted remark that, as a class, the old are becoming an increasing burden on the backs of the young and those in the prime of 25 life; and it would enable the Chancellor of the Exchequer to meet the demand for higher pensions, and would result in fewer people having to go on the National Assistance. The Chancellor of the Exchequer himself admits the priority of this claim; and I suggest that the proposal I am making would help him to meet it. In the case of the women, it would also more than enable him to meet the other admitted priority claim, the concession of equal pay. These are, however, from the point of my discussion to-day, subsidiary, secondary, though important, considerations. The main fact is that it would increase the number of human factors in production, with great advantage to the nation as a whole, and would at the same time satisfy the craving for creative achievement to many who to-day are denied that opportunity. I beg to move for Papers.